Virtual reality is closer than ever to going mainstream— but the
industry still has some major hurdles in its way.

On Thursday, analysts at
Oppenheimer published a report on the state of virtual reality,
in which they outlined the most significant obstacles companies
will face in the next couple of years.

The analysts said that although
the VR experience has improved over the decades, it's not where
most people want it to be.

Here's their overall outlook
for the industry:

“We expect gaming VR headset shipments to reach 5.6M units and
$1.4B in sales by 2018. Our conservative outlook reflects our
concerns over early generation products, which may disappoint
consumers in the gaming experience and title support.”

As companies likeGoogleandFacebooklead the push into virtual,
they will face both “the easy problems” and “the hard problems,”
according to Oppenheimer.

‘The easy problems’

Among the easy problems to address
are the need for better graphics and display resolution. While
head-mounted displays currently use the same resolution as retina
smartphone displays, these devices require even higher
resolutions because they are much closer to the
eye.

However, Oppenheimer sees this as an issue that companies will
soon resolve.

“Competition for higher resolution among smartphone panels
markers will push resolution higher, with or without the demand
from VR industry,” the report said.

“We expect commercial volume 8K
smartphone LCD display to be available by around 2020,” they
said.

Another “easy issue” to fix is the lack of apps, games, and
content available for VR devices.

“To reach mass adoption, VR needs to prove that it is more than
an expensive gaming accessory,” Oppenheimer said. “Right now, we
believe the ‘killer app’ has not emerged to compensate for the
cumbersome and expensive headsets.”

But companies like Sony, HTC, and Facebook are already starting
to invest in virtual reality content and apps.

‘The hard problems’

Oppenheimer believes that the more difficult problems early
entrants will have to address are those that relate to the user’s
experience: human interface, ergonomics, and the social
experience.

Sony's Project
Morpheus.Ben Gilbert/Business
Insider

The human interface component hasn’t been developed as much as it
should have. Its weaknesses make the experience for the user more
“virtual” and less “reality” and could therefore deter potential
buyers.

“The near-term solution is using traditional gaming controllers
for console games, which can seriously reduce immersion and
presence, as users are constantly reminded by the controller that
they are playing a game,” the report said. “While HMD and 3D
sounds can create immersive VR experience, the lack of compelling
touch and motion control feedback will break the sense of
presence when users try to interact physically with the virtual
world.”

In terms of ergonomics, they say the major virtual reality
systems set to be released next year will require the user to do
the following:

Wear a device that completely
blocks their view of what’s around them

Be tethered to an external
device, such as a computer or gaming console

Stay within a certain space
for position monitoring

“We are unsure if gamers and general consumers alike are willing
to spend long periods of time alone, in a confined space, with a
headset, and completely shut off from surrounding environment,”
they wrote of the limiting characteristics.

“The better the VR experience, the more isolated users are from
the outside world, such is the dilemma most VR developers and
headset makers,” Oppenheimer wrote. “We believe that VR,
comparing to [augmented reality], is lacking a critical social
aspect to the overall experience.”